13.12.16

LEGALSHIELD

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Harland C. Stonecipher, the founder of the company, started LegalShield after a car accident in 1969. Even though the other driver was cited as being at-fault, Stonecipher was sued. He depleted his life savings trying to fight the lawsuit. He founded the Sportsman’s Motor Club in 1972, which eventually became LegalShield as it is known today.

LegalShield is an American company that sells legal service products as part of an MLM business model. The company is one of the oldest MLM businesses in the United States. It was originally branded as Sportsman’s Motor Club in 1972, becoming Pre-Paid Legal services in 1976. The company made its initial public offering in 1984. The company was bought by MidOcean Partners in 2011 and is now known as LegalShield, an individual brand of MidOcean Partners.
The company develops and sells pre-paid legal service plans through about 7,000 independent attorneys throughout the United States and Canada. The company has developed identity theft monitoring and reputation services, offered partly through a company known as Kroll, Inc. The company has three different marketing strategies. It provides its legal services through a business-to-business marketing platform and through its MLM business operations. For employees, they are sold with a payroll deduction plan. The company also markets small business legal services. The most renown small business plan offered by LegalShield is known as GoSmallBiz, with former NFL star Fran Tarkenton as spokesperson.

The Good

  • Monthly services are inexpensive
  • Various legal and identity theft products
  • Affordable services for small companies

Inexpensive Monthly Service

The basic legal service offered through LegalShield is relatively affordable. Depending upon a person’s needs, $20/month provides access to the following legal services:
  • Advice/Consultation/Representation: A person can receive legal advice, representation at trial, will development, and other basic legal services.
  • Document Preparation: Help with residential loan paperwork, power of attorney, and other legal documents.
  • Automotive: Moving violation assistance and accident defense.
  • Family Issues and IRS: This service covers name changes, divorces, and IRS audits.

Identity Theft

There is also an identity theft product available, starting at around $14.95 per month. The basic plan includes the following items:
  • Coverage for spouse and member.
  • Credit Report with Score and Analysis
  • Credit Restoration Service
  • Unlimited ID Theft Consultations
  • Minor Protection
  • Single Credit Bureau Monitoring and Alert

Affordable for Small Companies

The small business protection plans are also all-encompassing. In Utah (cost depends upon location), we found that the Small Business Plan for under ten employees started at $39.00 per month and included the following:
Legal consultation on unlimited matters:
  • 20 consultation calls or letters per year.
  • 5 collection letters per month
  • 20 documents reviewed per year.
Optional upgrades and larger business plans will include trial services for small businesses on a wide arrange of matters.
For associates, the earnings seem promising. As a Junior Associate, you get $25 as an advance and another $25 once you get started as a regular associate (the fast track option). In your first 30 days as an associate, you get $75 as an advance.
While the startup cost is a little high in comparison to other MLM industries, our phone-in assured us that the training materials for LegalShield are substantial and useful.

The Bad

  • Expensive startup kit
  • Various issues with compensation plan
  • Legal issues

Expensive Startup Kit

We found that getting started with LegalShield was easy. However, the startup kit and fee of $149 is expensive. Here is what the kit includes:
  • The “Business in a Box” Associate Kit
  • Comprehensive online training program and materials.
  • Support through a sponsor and a team.
  • Online “kits” that function as your office.
  • Access to the Associate Support Center
  • Benefits Plan membership upon completion of marketing and sales requirements.

Issues with Compensation

There are two drawbacks to being a sales associate with LegalShield. When the sale happens, the associate receives an advance for the year. If the customer cancels their year membership to LegalShield, the company will take back an appropriate amount of the advance the “unfulfilled” part of the customer’s contract.
Another issue with LegalShield is the various tiers of sales associates. The compensation program rewards senior sales associates with large teams, but makes it difficult for those who are struggling to earn enough to support their business.

Legal Issues

LegalShield has had some problems in different states with its products and services that have resulted in litigation:
  • In Wyoming, LegalShield has run into problems with how it reports its compensation to sales associates (LegalShield reported them as assets, rather than liabilities).
  • In 2009, LegalShield received a letter from the FTC alleging that the company misrepresented the products and services that they sold.
  • Several lawsuits regarding similar issues happened in Missouri in the early 2000’s. LegalShield won two of these cases in jury trials, but other lawsuits resulted in a settlement against LegalShield.

The Bottom Line

We would recommend LegalShield as a viable company for associates with a background in legal matters and paralegal experience based on the following:
  • There is a generous and viable source of compensation for those who can sell LegalShield’s prepaid legal services in an MLM sales setup.
  • LegalShield has a fair number of leads available to sales associates.
  • Forbes has listed LegalShield as 78/100 of the best companies in America.
We also liked that LegalShield offered its services through a call center, on some occasions, guarantees some business leads for its sales associates. Also, we found that LegalShield will offer some perks and benefits for its associates, whereas in the field, other MLM providers only offer compensation and training for its sales associates.
  • If a customer cancels their prepaid service, the associate loses a certain amount of revenue paid out to them via commissions.
  • The high number of sales associates in the field makes it hard to guarantee leads as a viable source of income.

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